Women frequently take on a larger share of family and community responsibilities. In return, they risk missing out on opportunities to grow their businesses. Financing can help alleviate critical challenges entrepreneurs face, especially for women. Farm loans make it possible to jump-start a business and launch new levels of growth.
Financing allows farmers to cover startup costs, purchase supplies, upgrade equipment, and much more. Despite the critical role farm loans play, some women may face additional barriers that can make it more difficult to secure the funds they need.
Take a look at this complete guide to farm loans for women, including how they work and what to expect for the application process.
What Is a Farm Loan?
Farm loans are business loans specific to farmers and companies operating in the agricultural industry. Farm loans can be used to purchase the land needed for agricultural operations, as well as other costs like livestock, equipment, and more.
Farm loans can come in a variety of different forms, but what makes them unique is the way they cater to agricultural business needs. For women entrepreneurs, farm loans can provide access to capital when traditional funding sources are dead ends.
In the past, women were disproportionately declined for financing because they couldn’t meet the robust eligibility requirements of their gender counterparts. This has changed dramatically over the last few decades. Today, women entrepreneurs have widespread access to business capital, especially when it comes to farm loans.
Benefits of a Farm Loan for Women
Women looking to launch their agricultural business or grow their current enterprise may be able to seize on a variety of opportunities by seeking out funding. Here are a few of the many benefits.
- Streamlined cash flow
- Increased purchasing power
- Ability to take advantage of opportunities immediately
- Enhanced forecasting
- Extended repayment for major expenses
- Opportunity to purchase necessary equipment and other assets
Farm loans can be used to acquire the land, livestock, supplies, and equipment you need to get your business going. Farmers may also use farm loans to hire staff, cover operational expenses, manage cash flow, and more. When unexpected expenses hit, financing also offers a way to access much-needed liquidity.
Types of Farm Loans for Women
The agricultural industry represents 18% of the entire U.S. economy, with women constituting a significant portion of this critical sector. According to a 2019 Census of Agriculture report, it’s estimated that 36% of all U.S. farmers are women and that 56% of all U.S. farms include at least one female decision-maker.
Farm loans are a critical resource, allowing women to take full charge of their businesses to reach their goals. Take the time to go over different types of farm loans to understand how each solution works and which option would be the best fit for your business.
| Type of Financing | Description |
| SBA Loans | Small Business Administration (SBA) loans are government-backed financing solutions offering a number of benefits exclusively for small businesses.
SBA loans are renowned for featuring some of the lowest interest rates on the market. These loans also come with high funding amounts and lengthy terms that can be used to cover just about any type of business expense, including operating costs, real estate purchases, and equipment financing. To qualify, businesses must be:
Some of the SBA’s most popular business loans include SBA 7(a) Loans, SBA 504 Loans, SBA Microloans, SBA Community Advantage Loans, and more. |
| FSA Loans | The Farm Service Agency, or FSA, offers both government-back guaranteed loans and direct loans for farmers, ranchers, and other business owners in the agricultural industry.
Proceeds can be put toward purchasing land, livestock, seeds, supplies, equipment, and more. Farmers can also use an FSA to cover construction or renovations on their property. Funding amounts on FSA loans can be as high as $949,000, with repayment terms as long as 40 years. To qualify for a guaranteed FSA loan, businesses will need to meet a number of requirements from both the lender they’re working with as well as the FSA. At a minimum, you will need to have at least 3 years of farming experience out of the 10 past years. Depending on the lender you’re working with, there may also be requirements for business history, credit score, revenue, and more. One way to bypass some of the credit score requirements is by applying for an FSA loan with the FSA directly. You can reach out to your local USDA Service Center for information and to submit a loan application. |
| Term Loans | Term loans are structured as traditional business loans where you’ll receive a lump sum of capital to be repaid over regular installments. Term loans can be short-term, ranging from less than a year or as long as 25 years in other cases.
Term loans are great for breaking down large purchases or investments into more manageable payments. You can use a term loan to finance real estate, land, equipment, and pursue growth opportunities. Many businesses will also take on debt refinancing or debt consolidation with this funding type. The best way to approach a term loan is by having a strong estimate of exactly how much funding your business will need. From there, your payments will stay consistent over the duration of the loan. |
| Business Lines of Credit | Business lines of credit are revolving credit lines you can withdraw from as capital needs arise.
They work somewhat similarly to credit cards, except they feature higher funding limits. Business lines of credit are renowned for being incredibly flexible. As you pay down your balance, you can reassess the same funds to use again and again. This funding type can be put towards all major types of business expenses. Many firms will even use them as an emergency fund to cover unanticipated costs. |
6 Farm Grants for Women
If you’re looking to start your farm business or make a significant investment, farm loans are the way to go. They offer high funding amounts as well as an opportunity to break down significant costs into more manageable chunks.
Although smaller in size than farm loans, grants can be another worthwhile financial resource to explore. Take a look at some of the top financial resources for female farmers.
Vermont Farm Women’s Fund
Offers grants and scholarships to women farmers hoping to build their businesses and expand their education in agriculture.
WAMS
Also known as the Women and Minorities in Science, Technology, Engineering, and Mathematics Fields Program, this grant offers up to $300,000 to support research into various agricultural projects.
SARE Grants
This program offers up to $250,000 to be put toward research projects that aim to advance agricultural practices.
FruitGuys Community Fund
This program provides up to $5,000 to help small farmers and nonprofits become increasingly sustainable.
Young Farmer Grant Program
This program is geared toward young and budding farmers who would benefit from an additional financial push. They have a history of providing 50 selected farmers or ranchers with $5,000 in funds.
Fund-a-Farmer Grants
Offers farmers and ranchers working with livestock up to $3,000, with the aim of improving their animal welfare.
American Agri-Women Foundation
Offers farmers and ranchers working with livestock up to $3,000, with the aim of improving their animal welfare.
Farm Loans for Women: How to Qualify?
To qualify for farm loans, women entrepreneurs must meet the relevant minimum qualifications. There are three main criteria: time in business, annual revenue, and credit score.
These vary from lender to lender, but here are National Business Capital’s minimum eligibility criteria.
- 1+ Year in Business
- $500,000+ in Annual Revenue
We don’t require a minimum credit score. Instead of focusing on where you’ve been, our team focuses on where you’re headed.
How to Apply for a Farm Loan
Applying for a farm loan is not entirely different from applying for a general business loan. There are a couple of basic steps and processes. Take a look to get familiar with what the process could look like.
Step 1: Understand Your Funding Needs
A good place to start is by calculating exactly how much funding you’ll need to accomplish your goals. If you’re looking to purchase assets like land or equipment, obtaining the estimated sales price will ensure you’re securing the right amount.
For ongoing projects, do your best to make projections or consider opting for a business line of credit that offers inherent flexibility.
Step 2: Consider the Requirements for a Farm Loan
Specific requirements like credit score, revenue, and time in business will depend on the type of lender you’re working with. Some lenders may have strict credit score requirements, while others can be more relaxed.
For an FSA or SBA loan, you’ll need to prove additional qualifications. For starters, your business will need to be based in the U.S., you can’t be delinquent on any government debt, and you’ll need to show that you’re able to repay the loan.
Credit score requirements for FSA and SBA loans may vary, but generally, you’ll need to show good credit for the best approval odds.
Step 3: Decide On the Loan Type
As mentioned, farm loans come in a variety of shapes and forms. Deciding on the structure that suits your business best will ensure you have a manageable repayment schedule. If you’re unsure which type of farm loan to apply for, consult with your lender to go over your options.
Step 4: Select a Lender
Unless you’re looking to apply for an FSA loan directly through the FSA, you’ll need to work with a commercial lender. This is true for guaranteed FSA loans, SBA loans, and other farm loans. Qualifying lenders can include banks, credit unions, as well as online lenders.
It helps to compare financing offers with at least a couple of different lenders to ensure you’re getting the best rate. One helpful way to do this is by working with a B2B financing marketplace like National Business Capital. With a single application, you’ll receive personalized loan offers in record time.
Step 5: Submit Your Application
Once you’ve decided on the lender you’re going to work with and assembled your required documents, it’s time to complete the application. Remember that application processing times can vary greatly, but they can be even longer if you’re working with a bank or applying for an SBA loan. If you need funding fast, consider financing solutions from an online lender instead.
Review Farm Loans for Women With National
Women are a vital part of the agricultural industry, and we’re here to do our part to support them. At National, we assist businesses at every step of the way as they seek funding. Our experts offer guidance on how to get the right farm loan for your goals and grow your business.
Learn more about National’s funding solutions here.
Frequently Asked Questions
What documents do I need to apply for a farm loan?
The specific documentation you’ll need will vary depending on the lender you’re working with. Here are a few of the most commonly requested documents:
- At least one full year of business bank statements
- Two – most recent – business tax returns
- Balance sheets
- Cash flow statement
- Profit and loss statement
- Business debt schedule, if applicable
- Details of accounts receivable and accounts payable
- Description of and proof of ownership for collateral
- Proof of business insurance
- Licenses, permits, articles of incorporation, and other legal documents
- Business certificate
- Detailed personal financial information
- Complete business plan, including a detailed description of your business, products or services, structure, management, and marketing plan, as well as financial projections
Banks and credit unions traditionally need more documentation than non-bank lenders, but you should still expect to provide some level of information regardless of the lender type you work with.
What is the interest rate on farm loans for women?
Interest rates vary from lender to lender, but there are a few trends you should be aware of.
Banks and credit unions tend to offer lower interest rates (Prime + 2-3%) but have more restrictive eligibility requirements. Non-bank lenders are the opposite, trading looser eligibility criteria for higher interest rates.
Generally, interest rates on farm loans for women range from 8% to 60%, depending on a variety of factors.
How long does the loan approval process typically take?
That depends; Are you working with a bank or non-bank lender?
Banks and credit unions can take anywhere from 30 to 90 days to return a decision, potentially longer. Non-bank lenders, on the other hand, can return an approval in a few hours.
Are there any tax incentives or deductions for women farmers who take out loans?
Yes! For example, if you leverage equipment financing, you can potentially leverage the Section 179 tax deduction to lower your yearly tax liability.
There are other potential deductions you can qualify for. If you’re interested, speak with your tax advisor.
Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advice from National Business Capital and the author. Do not rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely on this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there may be errors, omissions, or mistakes.
Lauren Coppolone
Lauren has been with National Business Capital for 3 years, but her B2B experience extends as far back as 2015. She previously worked as a senior business analyst for B2B SaaS, Sky IT Group. Her current role as Marketing Manager for National has her coordinating between the financing side and small business needs. She’s also a regular contributor to National’s blog where she regularly shares her expertise and insight into small business financing. Lauren holds a B.A. from the Fashion Institute of Technology’s (FIT) School of Business.
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